It’s Tuesday once again, and we still have plenty of companies to cover this week – sorry, but it’s not over yet!
I may be suffering from Covid, but the stock market waits for no one, so let’s dive right in.
Today, I’ll be covering The Home Depot, Walmart and Coinbase.
The Home Depot (HD) – Q4 Earnings
A tough report from The Home Depot, beating on earnings but missing on revenue while also providing very muted guidance for 2023 with no revenue growth expected. With the housing market expected to see major headwinds in 2023 due to ever-higher interest rates, home improvement will likely also see a slowdown. As such, even keeping revenue at current levels is arguably a win.
Key Points:
- Revenue of $35,831m, slightly up from $35,719m (+0.3%) a year ago
- Gross profit of $11,926m, slightly up from $11,862m (+0.5%) a year ago
- Operating profit of $4,752m, slightly down from $4,825m (-1.5%) a year ago
- Profit before tax of $4,344, compared to $4,502m a year ago
- Profit after tax of $3,362m, compared to $3,352m a year ago
- Basic earnings per share of $3.31
- Dividend of $2.09 per share announced, to be paid on 23rd March 2023
- Revenue guidance for 2023 comes in flat, with no growth expected, while earnings per share are expected to decline, largely due to an additional $1,000m being spent on employee compensation
Walmart (WMT) – Q4 (Fiscal Q4 2023) Earnings
Walmart beat both revenue and earnings estimates by a significant margin in Q4, thanks to a more active holiday season than expected. However, as seems to be the common theme this quarter, the company provided weaker-than-expected guidance for the year ahead.
Key Points:
- Revenue of $164,048m, up from $152,871m (+7.3%) a year ago
- On a constant-currency basis, revenues grew 7.9% year-over-year
- Gross profit of $38,625, up from $37,349 (+3.4%) a year ago
- Operating profit of $5,561m, down from $5,887m (-5.5%) a year ago
- Profit before tax of $8,902m, compared to $4,782m a year ago
- Profit after tax of $6,275m, compared to $3,562m a year ago
- Basic earnings per share of $2.33
- Dividend of $0.57 per share announced, to be paid on 3rd April 2023
- Q1 2023 (Fiscal Q1 2024) revenue growth guidance in the range of 4.5% to 5.0% on a constant currency basis, with slightly improved operating profit despite a ~2% impact from LIFO (last-in, first-out). For the full year, Walmart only expect net sales to increase by between 2.5% and 3.0% on a constant-currency basis
- Walmart’s CFO, John David Rainey, said: “The consumer is still very pressured… And if you look at economic indicators, balance sheets are running thinner and savings rates are declining relative to previous periods. And so that’s why we take a pretty cautious outlook on the rest of the year.””
Coinbase (COIN) – Q4 Earnings
A surprising beat for Coinbase on revenue, while also reporting a smaller loss than analysts expected. Despite 2022 being a tough year for the company, they’ve taken action to reduce costs and diversify their income, while continuing to roll out improvements and new features.
With a leaner headcount and plenty of cash in the bank, Coinbase are (arguably) still the most reliable cryptocurrency broker out there. It’s withstanding yet another crypto-winter while its competitors fall apart.
Key Points:
- Revenue of $629m, down from $2,498m (-74.8%) a year ago
- This is following a year of turmoil in both the stock market and across the cryptocurrency ecosystem, made worse by the collapse of unscrupulous companies (e.g., FTX)
- Gross profit of $546m, down from $1,997m (-72.7%) a year ago. Gross profit margins improved at 86.8%, up from 79.9% a year ago
- Operating loss of ($555m), compared to an operating profit of $922m a year ago
- Loss before tax of ($571m), compared to a profit of $891m a year ago
- Loss after tax of ($557m), compared to a profit of $840m a year ago
- Basic loss per share of ($2.46)
- Minimal guidance given for Q1 2023, but the company expects subscription and service revenue of between $300m and £325m. No revenue guidance given for transactional revenue
- Cash and cash equivalents of $4,425m, with an additional $861m kept as crypto (USDC)
- Following the recent reduction in headcount, it’s expected that Q1 2023’s operating expenses will reduce significantly, to the magnitude of around ~$250m saved per quarter
- Monthly transacting users fell slightly quarter-over-quarter to 8.3m, down from 8.5m in Q3 2022
- So far in Q1 2023, the crypto market has seen a small recovery, up 40% year-to-date to 17th February, with a 5% increase in market volatility (benefitting Coinbase due to increased transaction revenue), but this is not guaranteed to continue
- The company believes that regulation will be a net positive for the crypto ecosystem, and will actually benefit Coinbase in the long-term as well. As such, the team are actively engaging with regulatory bodies and governments to assist where possible
Do you invest in any of these companies? Have these earnings changed your view about the company’s prospects in any way? Let me know in the comments!
